Lilly seals a R&D deal with Zydus

Lilly and Zydus established a collaboration to discover and develop potential drug candidates against a novel target, with the research primarily focused on cardiovascular diseases.

Zydus’ role within this covers drug discovery, lead identification and optimisation and conducting preclinical studies and clinical trials up to Phase II human proof-of-concept. In return Lilly will provide expertise and feedback regarding toxicology, ADME (adsorption, distribution, metabolism and excretion), chemistry, biology, clinical and regulatory aspects when deemed necessary to increase the probability of success. Lilly will also supply the chemical starting points.

The deal includes the option for Lilly to license any of the resulting molecules at different stages of development, with Zydus receiving up to $300m (€226m) in milestone payments. Zydus would also receive royalties from any product that reaches commercialisation.

another wave of M & A in Pharma

So far three deals that topping $150 billion in value have been announced in the global pharma industry this year. Merck & Co. acquired Schering Plough for $41 billion and Roche announced $47 billion plans to buy an additional 44 per cent in Genentech, and earlier in January, Pfizer had announced the $68 billion purchase of Wyeth. Aimed at cutting costs and bolstering research pipelines, the mergers are reminiscent of the last round of dealmaking in the late 1990s. And at that time it had roiled some Indian subsidiaries.

In 1998, Germany’s Hoechst Marion Roussel merged with France’s Rhone Poulenc to form Aventis. In 2000, US’s Abbott acquired Knoll from Germany’s BASF. In the restructuring that followed, one Indian arm of each “combined” firm was sold. The Indian arms had little in common with their parent firm with decades-old products that had long fallen off the parent’s radar. It was clearly difficult to extrapolate synergies seen from a global merger. The Indian pharma market also figured low in Big Pharma’s priorities at that time but India has recently emerged as an important market. Every MNC knows they need an India piece. Some, such as Merck, that exited in the 1980s are back with a new focus. This time around, there may be no such sell-offs.

BW